New business growth hits 13-month low
The growth of new businesses in the West Midlands increased at the slowest rate for 13 months in September, according to figures from Markit's Purchasing Managers Index (PMI).
Data shows that West Midlands activity growth fell to an eight-month low, attributed largely to the lack of new business growth. This casts doubt on the private sector's capacity to counteract public sector cuts.
Companies from the region also reduced their payroll numbers for the first time in eight months, although this is largely confined to the service sector.
The Business Activity Index, which measures the combined output of the region’s manufacturing and service sectors, dropped to 54.0 from 54.6 in August.
Glynn Jones, head of economics and strategy at Advantage West Midlands, said: "The contrast between the performance of manufacturing and services remains – the former continuing to grow whilst service providers noted a further reduction in activity.
"The easing of output growth was accompanied by a reduced rate of growth in new business and contractions in both business backlogs and employment.
"The PMI points to the softening of the recovery and underlines concerns around whether private sector demand will be sufficiently robust to offset future public sector cuts."
